Martin Lewis shares essential tips for savers ‘stuck’ in credit card debt

Martin Lewis spoke candidly to a viewer who found themselves “stuck paying interest” on their credit cards. Unable to move the balance to other lenders or make a dent in actual debt beyond interest payments, they turned to the finance guru for guidance.

Taking a deep breath on his BBC show, The Martin Lewis Podcast, the founder of Money Saving Expert explained that the viewer has two choices: “It’s playing the system, then it’s playing it outside the system, where you have to accept that you need help. There is no judgment involved in the second.

Martin took listeners through “three debt crisis tests” that would tell them what part of the system they should be in. The first test is whether they can meet their minimum monthly debt payments without taking money away from necessary and essential expenses.

The second is whether their total debt, excluding mortgages and student loans, is greater than their annual after-tax salary. Britons who can’t meet the minimum or have debts higher than their wages have been advised to “game the system”.

Finally, the third test was whether a person has “anxiety, sleepless nights or depression because of your debt”, to which Martin urged everyone who answered yes to “draw a line” under their finances and log out as soon as possible. because it “affects your life”.

For those who have passed the tests and are in the system but still struggling with debt, Martin explained, “You just want to look at what you can do. You want to make sure you pay off the cards and debts with the highest interest first. Just pay the minimums for the rest.

“Once the highest interest debt is paid off, then you move on to the second highest interest and hope that over time you will rehabilitate your credit and get a cheaper loan.” However, outsiders did not get such a clear answer.

Martin explained his options saying: “Outside the system you’re looking at getting a debt management system, maybe an IVA (Individual Voluntary Arrangement) or in extreme bankruptcy. Bankruptcy sounds scary, but it’s a way to stop creditors from chasing you.”

He also insisted that those considering bankruptcy avoid paying companies or individuals to file, urging them to instead turn to non-profit alternatives. Martin advised: “National Debtline, Citizens Advice Bureau, StepChange or one of the many good, local and free counsellors. Their job is to help you, not judge you.”